How to Evaluate Credit Card Offers

Credit card companies or banks go all out to woo customers with the most attractive offers on their cards which can be hard to resist. Credit cards come with a whole host of advantages such as short-term credit, discounts, cashback, etc. However, is it wise to jump at what seems to be an irresistible offer without reading the fine print? With so many credit cards out there, how do you choose the best one for your lifestyle and budget? If you want to know how to evaluate credit card offers and choose the best one for your requirements, then this article is for you.

Here are the most important factors to look out for when evaluating credit card offers:

Evaluate your budget:

A credit card gives you short-term credit, which means that you can buy products or services (within the limit of your card) and pay for it later, but within a pre-determined rate, minus any interest. If you are not able to pay the entire due amount within this date, you have the option of paying a minimum balance amount and interest will then start being charged on the balance amount.

The interest on a credit card’s outstanding amount can be as high as 24% to 48% p.a. So you need to evaluate whether you can either pay the entire outstanding amount within the predetermined date or if you can afford to pay the interest on any amount that is outstanding. If it is the latter, then it’s best to choose a card that has the lowest interest rates.

Choose cards with rewards that benefit your lifestyle:

All credit cards offer rewards, cashback, discounts, etc. However, there are different benefits for different cards.

For example, a certain credit card might offer frequent flyer miles that can be accumulated for free tickets. This would only be beneficial to someone who flies frequently. If your job or lifestyle does not require this, then it really would not be of benefit to you. To take another scenario, if you love eating out, going for movies and other recreational activities, choose a card that offers generous cashback or discounts when you swipe your card for such expenses. Then there are cards that offer savings when you refuel your vehicle on petrol or diesel, which can be great if you are always on the road.

Choosing a credit card after evaluating your lifestyle and needs will ensure that you get maximum benefit out of it.

Research the company or bank:

There are so many credit card offers these days from companies and even NBFCs that you may not have heard of (sometimes a bank partners with an NBFC to offer a credit card). It is important to research the source of your credit card to make sure that it is a reliable and trustworthy one.  

Be alert to the different fees:

Some of the different fees that you may be subject to are annual fee, late payment fee, etc. It would be best to look for credit cards that offer a waiver on the annual fee. Sometimes this is given after a certain time period is over, which is also worth waiting for.  

Choose a reputable payment system:

Two of the most well-known payment systems in the world for credit cards are Master Card and Visa. It makes sense to choose a card that has one of these payment systems as you can be sure that they will be widely accepted in any part of the country or the world. This is especially important if you travel abroad frequently or are planning to.

Interest-free EMI:

Did you know that with certain cards you can convert your purchases into interest-free EMIs for high-value purchases? You get a repayment tenure that can range from 3 months to a year. There are banks that have tie-ups with electronic goods stores, travel booking portals, etc., so you can comfortably pay in easy monthly instalments rather than pay a lump sum amount. It would make more sense to finance your purchase through a credit card that offers this than take out a personal loan for the same.

Mode of payment:

There are different modes of payment for credit cards and it is best to choose the one that is most comfortable for you. For example, if you are a mobile-savvy person, then being able to repay your credit card dues through net banking on the credit card app will be the easiest way. However, if you want to go the old-fashioned route of paying by cheque, then make sure that such options are available too.

Billing date:

The date for repayment of your credit card dues could be fixed or flexible, which again depends on the bank or credit card company. If you are confident of being able to repay the outstanding amount within the due date, then it would be fine to go with a fixed date. However, if your source of income fluctuates and you want a billing date that is flexible, then look out for such credit cards instead.

Read the fine print:

This is an important point that most people overlook. You can find the terms and conditions of your credit card company or bank on the website or on the pamphlet. This will tell you all about the interest rates, late payment fee, how the charges are calculated, etc.

Compare and choose:

Today, it is easier than ever to compare different credit cards at one glance with online portals offering you all the information you need. Whether it is comparing interest rates or billing dates, annual fees or reward points, you can get all the information you need online itself. Understanding the different options out there will help you take a better decision that you won’t regret later.

Choose the right credit card by following the pointers given above and you can be sure that the card you choose will be a friend that helps you out when you need it the most.

 

naishapatel

Naisha Patel

Financial adviser and writer.

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